The DCMS and Music Publishing: it’s crunch time.
It’s here. finally. Years of campaigning, months of evidence and hundreds of written submissions have been weighed, processed and fed into the newly minted report from the DCMS inquiry into the economics of music streaming… and it’s pretty darn good. Not perfect, but a thorough and relatively balanced view on the current state of play. It highlights the winners and losers in the delicate ecosystem, and suggests evolutions that could be made to rebalance the disparities- any of which would be much welcomed by creatives.
It’s fairly obvious the digital age has transformed the work of creators- sometimes for better but often for worse. The internet has generally divorced them from their creativity- certainly economically but often also in attribution (moral rights). In music the pandemic has laid these iniquities bare by removing a crucial revenue channel- half of every dollar spent on music globally (in a typical year) goes on purchases related to live performances¹.
The gap between expected income and what hits a creatives’ bank account has been exacerbated by public awareness of usage throughout the last decade. iTunes only ever shared a rough ‘popularity’ graphic, but Spotify’s apparently innocuous stream count has caused greater seismic effects than were perhaps intended. This all too public statistic has revealed the imbalances of the industry on a scale not previously seen.
Public perception is critical to lobbying. During the pandemic, the #brokenrecord and #fixstreaming campaigns have efficiently painted major labels and big tech in a poor, creator-crushing light. Spotify certainly hasn’t helped itself (e.g. appealing a royalty rate increase for songwriters), but the ‘battle lines’ against DSPs are far more nuanced than average creatives generally believe, want to believe, or are led to believe. The industry seems easier to comprehend with a phantom ‘big bad guy’ behind the scenes. How else to marry up expected success (and associated riches/glory) with the micro pennies that actually manifest? These phantoms. How dare they. Laughing all the way to their private Caribbean islands bought through the last morsels of creativity lowly musicians are forced to exhale in honouring excruciating and aged contracts. The narrative is highly effective at aligning those who feel (or indeed truly are) hard done by. Though there certainly are bad actors (or at the least, actors with competing incentives- including consumers themselves) the nuance has been lost. But then, when was nuance ever preserved in either politics or on social media?
The DMCS report captures some of this nuance, but certainly not all- particularly given the inquiry’s short timeframe and the sheer depth of industry weeds. Wether it’s fully grasped the finer details will be teased out in the hard lobbying now expected from industry stakeholders, but either way this is certainly not the end of the tale.
What does the report mean for the publishing industry?
From a publishing standpoint the report showcases the classics most would have expected- including minimum data standards, a closer look at black boxes and the important safe-harbour provisions. The big clanger is the recommendation for the CMA to investigate the impact of major labels owning major publishers, with a danger for the publishing industry to be caught on the wrong side of the case to pay creatives better. The report is pretty frank that major labels are the industry’s ‘bad guy’, with the MPA’s “conspicuous” responses only stoking the perspective that major’s market dominance infiltrates far beyond their own borders.
Publishers have been concerned about the possibility of statutory rates being applied to redress the recording/song balance. Looking across the Atlantic these have proved troublesome, with the argument being that a free market can deliver better returns to rights holders. Is this true in practice? It isn’t possible to build a balanced argument backed by unbiased data, as there is none. There are only hypotheses. The current ‘majors own the publishers’ dynamic and having rates set by federal government in the world’s largest music market leaves no truly isolated economy to compare or investigate. Statutory rates are certainly a concern, but the recommendations here are more vague than that demanded for equitable remuneration on the label side. Perhaps publishers can sleep easy(ish) for now.
The data side is clear and compelling (though, it always has been). It’s worth noting that even YouTube is asking for the industry to provide better data sets. There’s a strong case to be made that black boxes and excessive royalty chains are symptoms of poor data and integration rather than being root causes. Creatr was punching the air reading the report’s recommendation for “… creating or commissioning a comprehensive musical works database and… a registration portal so that rightsholders can provide accurate copyright data to necessary stakeholders easily”. Elder statesmen of the industry will shudder with nightmares of the GRD- but it’s failure hasn’t requited the need for such a solution- one which Creatr is far down the path to developing (and with songwriters firmly in mind). Everyone agrees songwriters should be better remunerated, and the report’s recommendations for them to be more directly integrated with the industry can be facilitated by the Creatr platform. It’s a good day when the Government is recommended to back a solution you’re already building!
A final thought- will the recommended ‘right to recapture’ on the recorded side usher in something similar for songs? Sony has already announced a tentative step in the right direction by disregarding pre-2000 un-recouped advances (on both the recordings and songs side). Several MPs had hoped the DCMS report alone would push the industry into self-correcting action without the need for legislation- so this has been a good sign indeed. Rumours of ‘right to recapture’ for songs could reign in the currently inflating catalogue purchase multiples- Hipgnosis (who praised many aspects of the report) et al. will be keeping a close eye, that’s for sure.
What are the next steps?
The UK government has 2 months to respond. They could implement some, or all, of the headline recommendations- many of which are quite straightforward. They could also simply “welcome the report” and take no further action. Creators will be of course be pushing for the former. Industry players will show their true colours depending how they lobby (and for what). Most intermediaries in the chain between those that use music and those that create it claim to be ‘value-add’- by their actions will they now be known.
The Ivors has already set up a page for creators to lobby MPs to implement the recommendations. #brokenrecord campaigners are rightly not seeing the report as a finishing line but rather as an opening salvo in the ongoing war.
History has told us the publishing industry does not enjoy outside inspection or recommendation. There’s an oft air of superiority and defiance in publishing circles. “This is more complex than you could possibly know!” is the defence given when levelled with the “Why the heck is it like this and why can’t you sort it?!” accusations that fly from corners such as the MMF and FAC. The DCMS report makes a decent effort of providing a reference point for all parties in these skirmishes- the publishing industry’s response moving forward will demonstrate their willingness to evolve.
Publishing is an aged industry, and its next steps will determine if it can self-revive or be left out to dry, ripe for disruptive innovation. The MPA’s engagement in the inquiry may have set the tone already- only time will tell.
